Crude oil prices fall as global financial markets tumble

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Crude oil prices fall as global financial markets tumble

"The oil market is clearly tightening", said a recent report from the International Energy Agency, pointing to three straight quarters in 2017 when "crude stocks fell by an average of 630,000 barrels per day; such a threesome has happened rarely in modern history".

Although the news is significant inasmuch as it indicates the United States' strengthening position on global oil markets, it is unlikely that USA condensate imports into the UAE will become a regular thing, according to at least one analyst.

Oil extended declines as persistent volatility in global markets prompted caution among traders, even as USA inventories reportedly fell.

The price of US crude turned negative and was down 1.3% at $62.59 per barrel.

Shale should continue to pressure the market, many analysts say. Traders may interpret rising US oil production and inventory builds as a sign that the market tightening has slowed with a possibility of downside risk. Yet, in a trade that illustrates how the rise of the American shale industry is upending energy markets across the globe, the UAE bought oil directly from the USA in December, according to data from the United States government.

The week's losses accelerated on Wednesday after government data showed weekly USA production jumping to a record 10.25 million barrels a day. Exports have increased from a little more than 100,000 barrels a day in 2013 to 1.53 million in November.

"The US record production - that's the nail in the coffin", David Lennox, resource analyst at Fat Prophets, said.

According to the EIA, 56 percent of China's crude oil imports came from OPEC members previous year, compared to a peak of 67 percent in 2012.

The US Energy Information Administration said on Tuesday it expects domestic crude oil production in 2018 to rise by 1.26 million barrels per day (bpd) to an average of 10.59 million bpd.

Despite the Organisation of the Petroleum Exporting Countries (OPEC) and Russian Federation cutting production in order to tighten the market, crude remains in ample supply. The automobile sector has been one of the biggest beneficiaries of the rise in employment levels, with most countries reporting higher auto-sales numbers, which in turn reflect in greater demand for petroleum products such as gasoline.

Oil production in the USA rose to 9.91 million barrels per day.

The market is nervous as it watches the upward trend of United States production.

UAE crude production was 2.85 million barrels a day in January, according to data compiled by Bloomberg.

According to Platts analysis, China's imports from OPEC countries increased by 7.1 percent on the year to 4.7 million bpd in 2017, but OPEC's market share dropped to 55.8 percent from 57.4 percent in 2016.

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